Advertisers expect the current downturn to be brief, with the number of companies marking up next year's budgets in real terms outnumbering those trimming budgets by nearly two to one.
The Q3 2001 Bellwether Report, the quarterly survey of marketing expenditure which tracks advertiser spending intentions, reveals that 42% of those companies which set new budgets for 2002 in Q3 (approximately one quarter of the panel) set them higher, in real terms, than current revised budgets, while just 23% reported a lowering of budgets.
The overall net improvement signalled by the Q3 survey was only slightly lower than that recorded at the beginning of the year, a fact made all the more surprising given that the data were collected between 13 September and 2 October, in the immediate aftermath of the terrorist attacks on the United States.
Trends in both new budget setting and revisions to current budgets were mixed by sector. Cuts were most common in the financial services, travel/transport, and entertainment/media sectors. In contrast, retail and FMCG and consumer durable sectors revised current budgets upwards and set higher budgets for next year on average.
The sharpest decline in current budgets and the weakest growth in new budgets was reported for media adspend, reflecting a shift to direct marketing and sales promotions - seen by some advertisers as more accountable mediums.
Spending on internet-related marketing activities, which in some companies includes all e-commerce projects, was reported to have fallen as a proportion of total marketing spend on average with share dropping from an estimated 2.9% to 2.7% between Q2 and Q3.
The overall net rise in spend for 'all other' marketing activities, was the weakest since data were first collected.
President of the IPA, Bruce Haines, said: 'Behind these figures lies a complex picture - a fundamental change in media mix, a certain amount of caution, a reflection of the year's activities and perhaps also a reaction to the events of 11 September.
'They show a significant redistribution of marketing spend as well as those tactical decisions taken by cautious companies in the third quarter of the year. We expect to see an adjustment of spend in the third quarter as budgets are recalculated in time for year-end. What we don't know is whether they've revised their budgets down because of savings they've already made on lower media rates, or whether they are having to redistribute their marketing budget elsewhere.
'We're seeing different patterns emerging too. Some sectors are holding up very well - food, retail, household goods and cars - while others like the airlines, whose ad spend was already down 15% by June of this year, are in trouble. Nobody knows the impact of the events of 11 September but those companies in trouble before that date have obviously had their problems exacerbated. But the good news is the marking up of next year's marketing budgets in so many cases which means that advertisers are optimistic for 2002.'
Notes for Editors
The Bellwether Report is produced for the Institute of Practitioners in Advertising (IPA) by NTC Research and published its first findings for Q1 2000. It is based on a questionnaire survey of 200 plus UK-based companies that have agreed to provide regular quarterly information on trends in their advertising and marketing activities. The survey panel, recruited from the UK's top 1000 corporations, was selected to ensure that the survey data provide an accurate indication of actual spending trends in marketing communications in the economy as a whole.
'Other' marketing includes corporate hospitality, entertainment, exhibitions, conferences and seminars, sponsorship, promotional material, newsletters and other corporate literature, public relations, market research, and internet/e-commerce activities.
Advertising expenditure rose from £15.3 billion in 1999 to £17 billion in 2000 (Source: The Advertising Association).
The IPA is the industry body and professional institute for the UK advertising, media and marketing communications agencies. It has 211 corporate members.
The Bellwether report contains detailed analysis of the UK’s marketing economy, based on a survey of 250 companies, representing all key business sectors.
To subscribe to the Bellwether report please contact markit on 01491 418 700, email
Bellwether costs £500 per annum (£375 for IPA members) for the report, £650 per annum for the data (£487 for IPA members) and £1000 per annum for both the report and data (£750 for IPA members).
Last updated 19/09/2008